- Jeremy Hogan feels the SEC has been riding the wrong horse since it filed its case against Ripple in December 2020.
- Basing his argument on the making of an “investment contract,” the lawyer says the Commission has not been able to legally show that XRP is a security.
- The SEC continues to go after more cryptocurrencies as part of its regulatory activities, leaving users sceptical of their approach.
As the case between the U.S. Securities and Exchange Commission (SEC) and Ripple/XRP hits its closing stages, industry experts have expressed their opinion on the developments recorded so far.
Jeremy Hogan, a partner at Hogan & Hogan, has argued that the SEC has failed to establish the basis of its decision to classify XRP as a security. Basing his opinion on the definition of an investment contract, he stated that the Commission has not demonstrated an “implied and explicit investment contract,” between Ripple and its customers.
He went further explaining that the SEC only attempted to prove a purchase agreement between the parties, and this differs from an investment contract as there is no obligation on the vendor.
“But that argument tears the ‘investment’ from the ‘contract’ as a simple purchase, without more, there cannot be an ‘investment contract,’ it is just an investment (like buying an ounce of gold) as there is no obligation for Ripple to do anything except transfer the asset,” he added.
“Indeed, how can a person ‘reasonably rely’ on an offeror to make them a profit when they have zero legal recourse when that offeror fails to come through?”
The SEC filed a case against Ripple and two executives in 2020 for issuing unregistered securities worth over $1.3 billion. Both parties have been at loggerheads since then, with Ripple claiming an unfair categorization of XRP as it doesn’t meet the requirement of the Howey Test.
More tension following SEC bottleneck regulations
Since the filing of the case against the XRP, the SEC and other regulators have heightened pressure on the sector. This year, Gary Gensler, the chairman of the SEC, stated that Ethereum (ETH) could be viewed as a security along with other proof-of-stake (PoS) assets because staking can be construed as an investment in anticipation of profit.
The digital asset ecosystem has criticized the approach of the SEC, describing it as “harsh and stifling the industry’s growth.” The XRP Army has been at the fore of the criticism blaming the woes of XRP in the market on the prolonged case with the SEC. On the flip side, several investors hail the SEC due to the increase in scams around the sector.
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